"Balance of Power" and "Commercial Vitality": Solutions to Dilemmas in a Decentralized Society

Thinkers who have advanced the development of blockchain and Web3 are facing a fundamental dilemma. It is the paradox between technological innovation-driven progress and the harms caused by centralization of power.

The Three Forces Facing Modern Society

In our era, three major forces dominate society. One is the enormous government power, another is the continuously expanding corporations, and the third is the runaway of organized civil society.

Government coercive power exerts an immeasurable influence on individuals. Throughout history, liberal thinkers have addressed the challenge of “taming Leviathan.” The traditions of the rule of law, separation of powers, and common law—all serve as mechanisms to maintain order while preventing abuse of power.

Similar concerns exist regarding corporations. However, the issues here are complex. Corporations are not necessarily “evil”; rather, they are entities optimized for a single goal—profit maximization. This optimization causes corporations to diverge increasingly from the social good as they grow larger. Once entrepreneurial spirit gives way to profit-driven motives, industries tend to transform over time. This trend is evident even in the video game industry, prediction markets, and the cryptocurrency sector.

Civil society also carries risks. Independent institutions, charitable organizations, and projects like Wikipedia are inherently meant to embody diversity. However, historically, when civil society becomes overly organized and converges around a single goal and leader, extreme outcomes such as the French Revolution or the Taiping Heavenly Kingdom movement have occurred.

The Inevitable Centralization Driven by Economies of Scale

To understand the challenges of the 21st century, we must consider the phenomenon of “economies of scale.” In the past, geographic distance and communication costs naturally limited the concentration of power. But today, this natural brake no longer functions.

The spread of internet communication has unprecedentedly expanded the dissemination of ideas. Simultaneously, the “diffusion of control” has regressed significantly. Automation technologies and cloud computing enable a few companies to manage vast resources. The proliferation of proprietary software and hardware has made the democratization of knowledge through “reverse engineering” more difficult than ever.

As a result, the effects of economies of scale are accelerating. Small initial differences over time grow into overwhelming disparities.

Strategies to Enforce “Diffusion”

In response to this crisis, it is necessary to deliberately promote more “diffusion.” Approaches can be taken at multiple levels, from government policies to private technological implementations.

Policy-Level Interventions

Examples include the EU’s enforcement of USB-C standardization and the US’s ban on non-compete agreements, both of which promote the diffusion of technology. Allowing employees to utilize skills and knowledge gained at one company in others spreads innovation benefits more broadly across society.

Copyleft licenses (such as GPL) also follow this direction. Development based on open-source code prevents knowledge monopolization by ensuring that open-source principles are maintained.

Furthermore, more advanced concepts include taxation mechanisms based on the “degree of product proprietaryization.” Systems like “Intellectual Property Harbor Tax” could incentivize owners to efficiently contribute their technologies back to society.

Technological-Level Rebellious Interoperability

SF writer Cory Doctorow proposed “counteractive interoperability,” which means developing new services and connecting to existing systems without permission from current platforms.

Specifically:

• Alternative social media clients: users can view content from other platforms via different interfaces and freely choose filtering methods
• Browser extensions: tools like ad blockers or AI-generated content detectors that bypass platform value extraction mechanisms
• Decentralized exchanges for fiat and cryptocurrencies: reducing the risk of single points of failure in the financial system

In a modern landscape where much value is generated at the user interface level, developing alternative interfaces that do not depend on platforms is key to achieving true power decentralization.

Diversity for Coexistence

The concept of “diversity” advocated by Glenn Weyl and Audrey Tang aims to create environments where entities with different opinions and goals can cooperate more effectively. Open-source communities and international alliances operate based on this principle, enjoying economies of scale while avoiding the concentration of power in a single entity.

The Relationship Between Charity and Power Balance

Charitable activities occupy a unique position in power balance strategies. Markets do not fund public goods. Governments do not invest in projects that “do not become a shared understanding among elites” or “beneficiaries limited to a single country.” Wealthy individuals’ philanthropy fills this gap.

However, caution is necessary. Charitable efforts are valuable only insofar as they function as a “counterbalance” to government power. If charity replaces government and consolidates authority, it merely accelerates power centralization.

Recently, in Silicon Valley, a dangerous shift is occurring. Tech leaders are not trusting liberal “exit mechanisms” but are instead trying to directly steer governments according to their preferences. This is a warning sign that the balance of power is tilting in one direction.

D/acc: The Path Toward Defensive Decentralization

The question raised by the “Fragile World Hypothesis” is serious. As technology advances, the number of entities capable of causing catastrophic harm to all humanity increases. Some argue that further centralization of power is the only solution. But in reality, the opposite is true.

D/acc (Defensive Accelerationism) means developing defensive technologies at the same pace as offensive ones. Crucially, these defensive tools must be open and accessible to everyone. This approach can reduce the psychological demand for power concentration driven by fears of insecurity.

A New Ethical Paradigm: Power Without Domination

Traditional morality has presented two extremes. Slave morality says “do not become strong,” while master morality says “must become strong.”

A comprehensive ethics based on the balance of power suggests a different path: “You are not permitted to form hegemony, but you should actively create influence and empower others.”

This reinterprets the dichotomy of “delegated authority” and “dominion.” There are two ways to realize this: one is maintaining high “diffuseness” toward the external world, and the other is minimizing the “potential for power leverage” when designing systems.

Practical Example: Lido’s Decentralization Model

Lido within the Ethereum ecosystem exemplifies this principle well. Currently, Lido manages about 24% of all ETH staked, but its social concerns are lower than other entities with similar levels of concentration.

This is because Lido is not a single entity but has a decentralized DAO structure internally, with dozens of node operators and a “dual governance” system. ETH stakers retain veto rights over important decisions.

The Ethereum community emphasizes that even with these safeguards, Lido should not monopolize all staking. This cautious stance reflects an ongoing awareness of the risks of power centralization.

Conclusion: Balancing Commercial Viability and Decentralization

Future projects must face challenges beyond merely designing a “business model.” They must also explicitly conceive a “decentralization model.” That is, they need to ask how to avoid becoming nodes of power concentration and how to address the “risks of wielding power.”

Decentralization is easier in some domains. The widespread adoption of open protocols (TCP, IP, HTTP, etc.) is rarely questioned. However, in certain application areas, decentralization is extremely difficult. In scenes requiring “decision-making capacity,” maintaining “flexibility advantages” while avoiding the “dangers of power concentration” will remain a critical long-term challenge.

The balance between commercial vitality and power is not inherently incompatible. Instead, societies that are properly designed with appropriate systems can enable coexistence, leading to truly sustainable development.